Title: D.R. Horton and Nucor in Trouble: An Unconventional Look
Some stocks might appear downtrodden and cheap on the surface, but they may not always be a bargain. This reality is evident in the following investments that have taken a hit in recent quarters, yet hold strong rebound potential:
- D.R. Horton Inc. (DHI): Once the largest U.S. homebuilder, DHI struggled in the latest quarter, losing 26% in a rising market due to seven-percent mortgages. However, with a 543% return over the past ten years and a lot of pent-up demand for single-family homes, analysts consider it a bargain at current quotes.
- Nucor Corp. (NUE): As the nation's leading steel manufacturer, Nucor experienced a 22% fall in the fourth quarter. Despite this, Nucor averages over 10% sales growth yearly and has largely positive earnings outlooks. Additionally, President Trump's proposed tariffs could provide further protection.
- Huntington Ingalls Industries Inc. (HII): The company, widely recognized for its dominance in the U.S. Navy shipbuilding industry, suffered a 28% loss in the fourth quarter. Yet, HII boasts an impressive 20% ROE over the past 13 years and has strong potential due to increased naval spending and the shrinking pool of skilled workers.
- Peabody Energy Corp. (BTU): Previously thought to be an industry relic, Peabody has seen a resurgence with rising electricity demand and government support. The company's balance sheet remains strong, with debt at just 12% of its net worth. Despite falling 21% in the fourth quarter, its low price-to-earnings ratio suggests potential upside.
Although these stocks have had a difficult quarter, their long-term potential and market trends may make them worthwhile investments. Understanding the companies' earning reports, economic conditions, and ongoing developments is critical to gauging their recovery potential.
- Despite experiencing a 21% fall in the fourth quarter, Peabody Energy Corporation (BTU) might be an attractive investment opportunity due to its low price-to-earnings ratio and the rising demand for electricity.
- Huntington Ingalls Industries Inc. (HII), which lost 28% in the fourth quarter, could be a strong investment considering its high return on equity over the past 13 years and the potential for increased naval spending and a shrinking pool of skilled workers in the industry.
- Shares of Peabody Energy rival, Peabody Energy Corp. (BTU), might also be worth looking into, given its recovering position and the fact that it now has a relatively low price-to-earnings ratio compared to other energy stocks. Similarly, this could be the case for other low-priced 'downtrodden' stocks like Peabody Energy, such as Nucor Corp. (NUE) and Peabody Energy competitor, Huntington Ingalls Industries Inc. (HII).
